EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0620123
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Borg Manufacturing Pty Limited applied for a TCO in respect of certain timber board lacquer spraying lines on 21 December 2006.
Instrument
TCO No 0620123 was made on 16 March 2007. It declares that those certain timber board lacquer spraying lines are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0620123 is taken to have come into force on 21 December 2006.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Customs Act 1901, enacted by the Australian Parliament, establishes a framework for the administration of customs duties and provides for the creation of Tariff Concession Orders (TCOs) to address specific trade needs. The Customs Act 1901 was introduced to streamline the process of applying for tariff concessions, ensuring that certain goods that are not produced domestically can benefit from reduced customs duties. This is particularly aimed at fostering fair trade practices and supporting industries that rely on imported goods by reducing their overall costs. The process is overseen by the Chief Executive Officer of Customs, who is responsible for deciding whether an application meets the core criteria and subsequently issuing a TCO. The legislative intent is to balance the interests of domestic producers and importers by providing a structured approach to tariff concessions.
Scope and Application
The Tariff Concession Instrument No. 0620123, made under section 269F of the Customs Act 1901, applies to entities such as Borg Manufacturing Pty Limited that seek tariff concessions for specific goods. The application of this instrument is geographically broad, extending across Australia and impacting the importation of certain timber board lacquer spraying lines. The instrument reduces the customs duty rate from 5% to free for the specified goods, provided that no substitutable goods are produced in Australia. This concession was granted as the Chief Executive Officer of Customs determined that no such goods were being produced locally. The process requires adherence to the core criteria stipulated in the Act, such as ensuring the goods are not those listed in section 269SJ, which are ineligible for tariff concessions. Additionally, the CEO must ensure that the application is published in the Gazette, inviting public submissions, although no submissions were received for this particular instrument. The commencement of the TCO aligns with the date of application, in this case, 21 December 2006, ensuring that it does not affect existing rights or impose new liabilities on individuals or entities prior to its registration.
Key Provisions
The Tariff Concession Instrument No. 0620123 made under the Customs Act 1901 (section 269F) allows for the application of a reduced rate of customs duty on specified goods, in this case certain timber board lacquer spraying lines. The instrument was made on 16 March 2007 by the Chief Executive Officer of Customs (CEO) after Borg Manufacturing Pty Limited applied for a Tariff Concession Order (TCO) on 21 December 2006. The instrument specifies that these goods are subject to a duty-free rate as set out in item 50 of Schedule 4 to the Customs Tariff Act 1995, which contrasts with the usual 5% duty rate.
The Act imposes several obligations on the CEO in relation to TCO applications. Under section 269C, the CEO must assess whether an application meets the core criteria, which include the condition that no substitutable goods are produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets these criteria, as stipulated in section 269P(3), they must make a written TCO. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not proceed (subsection 269K(1)). In this instance, no submissions were received in response to the published notice.
Failure to comply with the requirements of the Customs Act 1901 or the terms of a TCO can result in both civil and criminal consequences. While the specific offences and penalties are not detailed in the explanatory statement, the Act generally provides for fines and imprisonment for breaches related to customs duties. The maximum penalties for such breaches can vary, but typically involve substantial financial penalties and potential imprisonment, depending on the severity and intent of the breach.
The TCO does not affect the rights of any person except the Commonwealth as at the date of registration, nor does it impose any liabilities on any person in respect of actions taken before the registration date. Importers of the specified goods, however, will benefit from the reduced duty rate and can apply for a refund of duty on goods imported since the TCO is deemed to have come into force on 21 December 2006 (paragraph 126(1)(r) of the Regulations). This provision ensures that the TCO does not create any adverse consequences for individuals or entities other than the Commonwealth.